Exploration of the liquid hand-to-mouth concept leads to another economic conundrum: the credit card debt puzzle. The puzzle refers to a situation in which a consumer simultaneously holds interest bearing credit cards debt and liquid assets. Economists have mused for years over why people engage in this obviously irrational behavior. Why not just use your… Continue reading The Credit Card Debt Puzzle: A Lesson in Cognitive Biases
Over the last couple of years, there’s been a lot of speculation that traditional economic models are failing to explain the post-Great Recession world. Some are aruing that we’re in “secular stagnation”. Some think that the Fed needs to pursue more radical policy to adjust for consistently sluggish growth and stagnant wages and prices. This could… Continue reading The Liquid Hand to Mouth – The New Normal?
Sometimes, the economist in me really hates the news. Wait, that’s all the time. Economics is a complicated and imperfect discipline that is constantly changing. Unfortunately, the mainstream media is mostly interested in what it can feed people to get them to turn on the channel RIGHT NOW, so silly things like “facts” and “accuracy”… Continue reading Mainstream Monday: 3 Things you Should Know About Economics